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February 25, 2024

Volatility Report Don’t poke the bear 2/25/24

“Tell me lies, tell me sweet little lies”

According to F. Diane Barth, a psychotherapist, people want to be lied to. Its common she says, “I have learned that it is not unusual for people to believe someone, even when they have substantial proof that the are being lied to.”

A few examples according to her, “include parents who believe that their children are not taking drugs, even after finding a stash in the child’s sock drawer; lovers who insist that their partner is faithful despite unfamiliar underpants in the laundry; and business partners who believe that financial losses are for some unexplained reason other than that their best friend is stealing from them.”

So when it comes to the markets does truth come in degrees?  The promise of high tech and AI is true without question, but when.  As users of high tech as opposed to dumb terminals how do you find it? Personal experience is a good place to start.

Security wars

I give anyone that uses a computer a launching pad here by mentioning popups, drop down and anything that auto filles when your cursor runs across it but there still is a few pixels remaining for you to see the content you are working on, so I will leave that one to you. Rather its the how safety will be the main factor that kills off this round of high tech battle for a monopoly.

From iPhone to desk top and laptop the cross checks and triple checks takes up hours daily. Plus how did the four number pins grow precisely at the same pace as the tuition we paid to get those high tech degrees?  The four digit pin is now “more than 8 characters long, use lower case, upper case, a number, and a special characters, and can not use a word or date associated with your account details.”  Not to mention that the standards varies – can that be a thing? In other words what is acceptable to one broker or bank or online vendor. What a PR disaster if there is a security leak.

Nvidia is clearly in the lead on the CPU/AI front but who would have thought a company known for its gaming GPU could make that jump.

The push to win, to have your idea, your answer to the problem as the one accepted and dominant among most users is a path by nature full of competitions. The use of VPN saves money, protects my pc gives me access to real time broadcast from the USA when offshore with good performance. It encrypts my line from what location I choose.

Don’t need McAfee, Windows defender, don’t need spyware, don’t need. Yea…no… now the banks think I am a hacker and Stripe has account locked out because they don’t recognize my IP address. Its more than the conflicting applications creating more problems that is too benign of a condition being created.  The i-Gens are in full greed mode doing battle to make sure their solutions become primary solutions.  Its an old way of thinking being used anew for predominance over your machines.

Progress will never change, ever. Its form will always remain the same only its content will vary. When it comes to the equity markets, its progress will always be the same and its participants will always be the same.

So, why do we continue to believe the lie, even when we have rational and substantial evidence that its a fairy tale today, a fantasy, a real time science fiction that will fight it out for its right to “party.”

If you do not pursue the truth about the markets volatility will be what you find.

Thursday I mentioned at the end of the day a near-term high was expected. That still is the case. A blow out roaring twenties advance form here is not the call. More of the chop that started at the end of January, the wedging out of a high.

However just like 2023, my volatility model (TEM) supports a trend here and the wedge could be a 1-2 series in EWT, both support the blow out idea. Plus, some Astro-analyst expect a blowoff into mid-spring. On the short term check into the LinkedIn group daily.

So, there you have it, we do have price, time and context supporting a high rate of change advance from here. CT’s mapping would expect it after the next near term low, that is after the next one day “btfd” decline into 2/28 followed by a roaring bull into June-July.

Trading wise I have lots of cash and I am waiting. I know 2022 that was a baby bear, but we kill-it made $1mil on $100k. When the real one gets here, I will be ready until that time, little trades, and small % of account positions. Its the waiting that is a killer.

What the market gave us in 2022 was more than a bear to trade

I remain bearish here based on my price studies , my Astro and mapping work, and contrarian sentiment here. The bravado and hyperbolizes are at a fever pitch. I mean this “market is in a league of its own,” right?  Well not really, been there done that since the 1972 high to date I can count four, today would be the fifth.

And like other bubbles people ten to twenty years from now will be buying their gold, their bitcoin, their crude oil knowing the boom has to happen again.

Plus, no one will believe a bear when it gets here in full living color. They will have no idea that anything could happen like it did to the Nikkei Dow over 20 years ago. This historical market created in 1949, is just now getting above its 1989 highs and the majority of companies that made up the 225 have long gone.

p.s. That was when I made my second fortune, Nikkei put warrants; and god bless my clients from that period.

My most successful clients ask questions, point out problems. As a results they are the best informed and help make this market advisory one of the better ones OFF “Wall-Street.”

No matter your time in the business you are always learning and always seeking ways to improve. AI is all the rage for that reason, it is not a closed system, its a learning system.

So what happened in 2022 that made it a good trading year for bears.

I don’t find a need here to explain why anyone would trade to profit from declining prices. But is a dirty job and someone has to do it, many financial pros cannot based on the industry we are in, policy restrictions plus the phobia programmed into it.

One of the answers for CTs is here. The first chart used here is the bear market of 2022. CT called the top in November 2021 and started its bear trading campaign.  That was based on all the areas you read about today from Contrary Thinker, price, time, context and contrarian sentiment.  But one thing CT did not look at as a “timing” thing, was the level of VIX. However, for the duration of the bear it remained above 20. VIX is the implied or perceived risk index. Its not about trend direction its a gauge of fear that the market is going to go lower, a condition of the market. This is why the element of “context” is needed in ones forecast.

For us in 2022 it meant carry over when the market sold off, persistence of trend, pro directional, lower gap opens, how ever you’d like to describe it, the higher VIX did us well (see my numbers below.)

That she did and no this was not my first rodeo, but it was good to be back in the saddle of long only high delta options game.  I feel the numbers are adequate. I did did not need to be that active, as in too many trades.  Better trading is built of less activity but being aggressive when the market is in that panic mode, our models TE#1.

For now the trade ideas are broadcast from a WhatsApp community but we are talking to app developers for a WhatsApp type of app just for the trading community. The Trade Exchange app is trash.

In any event, looking at the market for the past two years, the VIX tells the story of one of the key missing ingredient’s for Contrary Thinker’s bear trading campaign. Please have a look at VIX from April of 2023 to date. You will see how perceived risk (psychology) has been repressed below 20. For all the reasons sited above this is not the ideal context for bear traders.

The short term trends would not be any help, because it is not direction alone that makes the profit but HOW the market gets there. A downtrend full of “fits and starts” and higher failed gap opens, the “changeability” of the trend from one day to the next, makes it fruitless. Without the carry over, the best a bear can do is stand aside. BUT…

Waiting it not good for commerce

People want the action, they hear the same sales pitches every day always being pushed to execute it now, it is today. That is the way of commerce and especially in the financial industry. It’s hard when brought up in a culture based on the protestant work ethic. To be seen doing nothing people think you are lazy right?

On top of that 99% of the industry, we are all programmed to be transactional, it is hard to lay off not to trade after reading all the excitable and nerve tingling information plus the nightly news. But as the brief below tells us “you do not have to trade.”

The problem for publishers of market analysis like journalists is they have to get your attention, keep your attention, get you to buy the product. No one buys good market research with “ keep your powder dry the great trade is next month.”

Blind bets are forced antes made by players to the left of the dealer in flop-style poker games.

Why are there blind best in poker?  If not, a player can sit there for as long as he likes and not play. He can wait to try to catch a premium hand before he makes a bet, a good bet.

In “forced ante poker you have one of the clearest examples of the impact of money on the player. Forced by the “rules of the game.”

If the player antes $100.00, and he is dealt a “5,” and “7” unsuited low cards and someone raises the bet before the flop – draw cards – the odds of him winning or losing are the same. The money has no impact on the odds. 

However, human nature will push him to “defend his blind bet.”  Not so much in this example hand of a “5” and “7” unsuited, which have about zero odds of winning. But what if the player had been dealt a pair of twos?

What would be even worse if he had experienced this before, a big bet that “5” and “7” hand once before where he got lucky and won big? How what is his posture? He may be prone to make a “bad bet.”

Placing “defensive bets that have little chance of “catching” a good card or cards to win is going to lose and break the your bank over the long run.

The poker player needs to know what the premium hands are, which ones “stand alone,” that can win without any help from the draw or flop cards. The same holds true trading the markets.

Trading futures, ETFs, high delta options or any other risk market is the same, in that the market does not care about your money and your money has no influence on the odds of a long or short entry winning. 

All trading strategies are event-based models. Contrary Thinker produces technical systems, mechanical strategies and dynamics forecast that are 100% price driven where each entry signal is a good bet.

  Money stops are a necessary evil, a wrapper the trader brings around the strategy to protect his capital.

No matter how much the industry wants you to trade, no matter how much the media touts to get your attention onto the momentary news cycle there is nothing in the rule book that say’s “you have to trade!” There is no blind bet or ante.

I am sure that many traders who hear it said that the best form of risk control is not to enter the market think it’s a joke. 

In reality, the best investors/traders in the world from the start of legendary traders to the legends of today like Trout, Jones, Soros and Druckenmiller do exactly that to control risk. They wait until the condition is “perfect” for their trade plan and once into that “perfect trade” they leverage up and leverage up aggressively, just like the Turtle trading method.

Once you understand this, you know that you should not be impacted by the last trade’s outcome. Even if you did not hang on long enough on a winner or stayed too long with a loser, take money out of the picture

Contrary Thinker “stick with your strategy, focus on the process.”

MarketMap™ 2024 Scenario Planner #7 (maps on segments) and Volatility Reports 2/26/24 in production.


2024 will be a great year.

 

Great and Many Thanks,

 

Jack F. Cahn, CMT

Contrary Thinker Since 1989,

Copyright 1989-2019

Capital Managers and Professional Investment Advisors visit: www.ContraryThinker.com

Contrary Thinker 1775 E Palm Canyon Drive, Suite 110- box 176 Palm Springs, CA

92264 USA. 800-618-3820 or 25/1 Poinsettia Court Mooloolaba, QLD Australia 4557 614-2811-9889

— Contrary Thinker does not assume the risk of its clients trading futures and offers no warranties expressed or implied. The opinions expressed here are my own and grounded in sources I believe to be reliable but not guaranteed.

— Pricing is subject to change without notice.  My indicators and strategies can be withdrawn for private use without notice, at any time.

— Contrary Thinker does not refund policy all sales are the finale.

Trading futures and options involve the risk of loss. Please consider carefully whether futures or options are appropriate for your financial situation. Use only risk capital when trading futures or options

 

Contrary Thinker’s Membership Levels

Insuring your future in the global equity markets.

 

Team Level One (Junior partner) $99,995.00. 

Three-day personal meeting (Palm Springs CA or Mooloolaba Beach QLD, Aust.) Non-compete and non-disclosure agreement required. One-year mentorship.

Premier Membership,

Global market research publications: MarketMap-2023 Astro Scenario planner and “Volatility Reports”. Membership includes one on one mentorship and TradeStation addons of indicators used in Volatility Reports. Quarterly $539.00, Semi-annual $939.00, Annual $1689.00

Regular Membership,

Global market research publications: MarketMap-2023 Astro Scenario planner and “Volatility Reports”. Quarterly $495.00, Semi-annual $849.00, Annual $1494.00,

Membership Addon, TradeStation™ Advanced Trader’s Package (ATP) all indicators used in newsletters for $195.00/year

Trade Ideas smart phones and tablets, one time set up fee of $10.00, and $10/month to app provider (CC required.) Profit sharing fee structure see below.
Trade Station™ strategy addons

Advanced Trader’s Package (ATP) All indicators used in publications, good forever locked code. Include TEM, indicators, and user functions. $2,495.00

Systems locked code include TEM, indicators, and user functions. All systems package $9,995.00 or bought separately, $3,995.00 each.

Systems open code, all systems $$24,995 or $9,000 each (three swing traders off daily bars and three-day traders off id bars and three scalpers.) Open code TEM is only included in Team Level One.

The system of the month club

$45/month, $445 paid annually.

Private Support Group Only (must have a LinkedIn account as part of the application.) $25 set up fee and $10/month.

***All levels of membership include a LinkedIn support group, the “Strategy Collective” for Trade Station systems, indicators, and code. “Volatility Reports” LinkedIn group for real time market analysis and commentary. ***

Only one profit sharing criteria is set for each ETF and Long Put/Call trades

  • Profit >25% pays $25.00
  • Profit >50% pays $50.00
  • Profit >75% pays $75.00
  • Profit >100% pays $100.00
  • Profit>200% pays $200.00

***I only trade in-the-money contracts***

April 16, 2023

The best way to learn risk markets and trading

The best way to learn about markets and trading…

and how to prepare a trading plan is by learning through trading systems. Because trading systems encompass all the things that an experienced trader is looking at during the trading day, weeks, and months to organize his thoughts into a trading plan.

See the eight-minute video below on two swing trading systems

A system gives you the ability to do several things at once without several decades of learning and you do not need to be a program coder to do this.

All indicators in all systems no matter if they are oscillators, breakout bands, or moving averages are trying to do the same thing to predict the market for profit.

They are trying to predict the movement of the market to an extent that it generates profit net commissions and slippage. So, the trader and the system are the same things. The only difference is that while trading systems are good you will never find a computer-driven trading system that is great.

Here is an important fact, there are great traders.

As a mechanical systems trader what you are looking to do is take advantage of a positive mathematical expectation, the average trade stat. Like the one seen in this report.

The example here shows the Trend Walker on Crude with an average trade of $1,547.57. So, every time you take a trade on average you should make near that amount. In general, that is how the majority would love to trade at the top of the average bell curve. With discipline, a system provides and assumes you are taking every trade. The Crude oil Trend Walker has a good Average win to average loss ratio of 2.14 to 1 on all trades with an edge favoring the short side, as you can see.

Trading with discipline puts the trader where most investors want to be at the crest of the bell curve. It can be equated to the buy-and-hold trading plan promoted by the brokerage and funds industry.

So, the point is that trading for an average, be it from a system like Trend Walker or Buy and Hold S&P, which averages 12% per year, does not avoid the traditional periods that are not conducive to their methods. Hence, they are caught in bear markets or max drawdowns as we say in the systems development and trading sector.

So, to be a great trader, one needs to understand what it is to be an average one and what the risk of that kind of investing happens to be, and to turn that risk into their own opportunity.

I feel you can see how systems trading makes a good foundation for the learning experience. Along with these insights, by investigating training systems you will pick up more than the technical vocabulary, the terms used for the various tools. Some are common in all platform’s tool kits, and some are proprietary.

You will also gain an understanding of the difference between price-based entries and price-based exits as opposed to money-based entries and exits. You will realize what the interplay is between risk and reward, and what faster entries mean regarding your overall risk compared to slower entries.

You can visualize a system of any kind, even buy, and hold a diverse portfolio of shares with a variance developing around it. Such an envelope depicts the risk and reward fluctuations it will go through in time, which is a money wrapper. Just like profit targets and stop losses they have nothing to do with being right or wrong in holding the position.

Because the market doesn’t care about your money or your account size. If you contract or expand one side or the other or both how does that impact the overall performance of your system? But tell you nothing about being right or wrong about the investment. It’s about the investors’ money strategy and their temperament toward risk and account size.

So, these interplays are something that you learn through the understanding and the trading and the measurement of trading systems.

You must learn all the above before you can start any sizing exercises or portfolio allocation rules because you need to have the numbers first. You need to have the numbers from what your trade plan, your system, is going to generate for you in the future before you can do position sizing or asset allocation for the money.

So, these are all the things that trading systems can bring to the individuals who want to learn the markets instead of trying to learn what it takes many of us careers to learn in trading. To learn all the nuances of the elements of time, and the complicated issues of extra market events that can have an impact take hands-on experience. Learn what risk is and how to see it and when the time to take advantage of it.

To be a great one either you are born into it or it takes layers of time to learn. So, if your goal is to be great you still have to be good first and my suggestion is the use of training systems as opposed to being a gunslinger for all the above reasons.

So along with three swing trading systems, you have one on one access to the master once a month plus DM on LinkedIn with questions and answers when they arise.

Since the 1990s my systems have retailed for $5k locked code, and prices go up from there if open code is needed. TEM can be used visually, even if the hard code is programmed in the systems. Your choice of one of three swing traders for the lease period. Workspaces include TEM volatility model.

$595/Quarter or
$1,595/year
At the end of the training period, you can own the system net what was spent on training.
Locked code $4,995.00 no expiration date

 

Contrary Thinker insuring your future in the global equity markets.

 

Great and Many Thanks,

Jack F. Cahn, CMT

Contrary Thinker since 1989,
Copyright 1989-2023

Contrary Thinker 1775 E Palm Canyon Drive, Suite 110- box 176 Palm Springs, CA
92264 USA. 760-459-4681 OR

25/1 Poinsettia Court Mooloolaba, QLD Australia 4557 614-2811-9889

— Contrary Thinker does not assume the risk of its client’s trading futures and offers no warranties expressed or implied. The opinions expressed here are my own and grounded in sources I believe to be reliable but not guaranteed.

— Pricing is subject to change without notice. My indicators and strategies can be withdrawn for private use without notice at any time. Digital products are not returnable or refundable

–Trading futures and options involves the risk of loss. Please consider carefully whether futures or options are appropriate for your financial situation. Use only risk capital when trading futures or options

Great and Many Thanks

Jack F Cahn. CMT

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